Monday, May 20, 2024

Economic growth modest throughout Africa: IMF


The International Monetary Fund’s (IMF) regional economic outlooks predicts modest economic growth of around 3.2 percent, in most sub-Sahara African countries during 2019.
The IMF writes that growth remains too low to meet the needs of growing populations.
IMF division chief, Papa N’ Diaye, and Catrine Purfield, Deputy Director of IMF rolled out the bi-annual report on Thursday October 31 at the United Nations Economic Commission of Africa (UNCEA).
Security issues are hampering domestic growth. IMF previously recommended reforms to attract foreign direct investment which requires that people feel safe.
Growth in sub-Saharan Africa is projected to remain at 3.2 percent in 2019 and rise to 3.6 percent in 2020. This is a slower recovery than expected for around two-thirds of the countries in the region, partly due to a challenging external environment.
Growth is projected to remain strong in non-resource-intensive countries, averaging about 6 percent. As a result, 24 countries, home to about 500 million people, will see their per capita income rise faster than the rest of the world. In contrast, growth is expected to move in slow gear in resource-intensive countries (2.5 percent). Hence, 21 countries are projected to have per capita growth lower than the world’s average. Reducing risks and promoting sustained and inclusive growth across all countries in the region requires carefully calibrating the near-term policy mix, building resilience, and raising medium-term growth.
Growth is forecast to be slower than previously envisaged for about two-thirds of the countries in the region. The downward revision reflects a more challenging external environment, continued output disruptions in oil-exporting countries, and weaker-than-anticipated growth in South Africa.
Growth prospects vary considerably across countries in the region in 2019 and beyond.
Sub-Saharan economic activity needs to pick-up, but at a slower pace. However, more job creation is needed in order to absorb new entrants which are more than 20 million labor markets every year.
According to the report, advance economic diversification, increasing medium-term growth, promoting private sector investment, comprehensively tackling tariffs and non-tariff barriers in the context of the AfCFTA, enhancing competition and developing value chains.
Domestic debts negatively impact private sector activity and the delivery of social services while increasing banking sector vulnerabilities and undermining citizens’ trust in the government. Unpaid debts also weaken the ability of fiscal policy to support growth, casting doubt on the merit of relying on debt financing to avoid spending cuts.
Debt reduction, (verification, prioritization, liquidation) and to preventing accumulation, through public financial management reforms, building buffers, and timely external supports is recommended, although policy recommendations are country specific.

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